When Zuckerberg fired Morgan Stanley, mortgage edition

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Mark Zuckerberg has a reputation as a geek who’s focused mainly on technology; the finance stuff he’s outsourced to his COO, Sheryl Sandberg, and his CFO, David Ebersman. When anonymous griping about the Facebook CFO started appearing in the press attributed to senior Facebook executives, I didn’t think those executives would be as senior as Zuckerberg himself.

Still, the timing of Zuckerberg’s marriage was interesting, coming as it did the weekend of the IPO. And today we learn, in the 23rd paragraph of a Bloomberg story, that Zuckerberg was annoyed enough at Morgan Stanley after the IPO that he severed his mortgage relationship with the bank, paying off his loan in full and moving his mortgage to a rival bank, First Republic.

When you’re rich enough to buy any number of homes you want for cash, a mortgage isn’t the same kind of financial product as it is for we mere mortals. Instead, it’s part of a suite of financial services and wealth management, which can cover everything from big-picture investment strategies to providing someone who’ll make sure your electricity bill is paid.

According to Bloomberg, by moving his mortgage from Morgan Stanley to First Republic, Zuckerberg managed to reduce his monthly loan payments from $21,256 to $19,275. His new bank explains how the game works:

First Republic Bank, which provided Zuckerberg’s mortgage, doesn’t comment on specific loans or clients, said Greg Berardi, a spokesman for the San Francisco-based company.

“First Republic, like most banks, prices its credit products based on the strength and totality of the entire client relationship,” he said in an e-mailed statement. “This is our approach with all of our clients.”

The story here, then, isn’t the 1.05% initial rate that Zuckerberg was paying on his mortgage, or even the Libor +80bp rate that he’s been paying since June. Rather, the story is that Zuckerberg has decided that he wants to have his wide-ranging client relationship with First Republic, rather than Morgan Stanley — and that he made that decision in May, within a couple of weeks of the Facebook IPO. The new mortgage is the only publicly-visible part of the change, since it needs to be recorded in public records, but you can bet that First Republic is taking over much more than just Zuckerberg’s home loan here.

Which puts into focus just one of the many risks, to a bank like Morgan Stanley, of messing up a high-profile IPO like Facebook’s. If things go wrong, you don’t just take a hit to your reputation. You can also lose a lifetime relationship with Silicon Valley royalty. And those relationships are worth many millions of dollars.